Make sure to read the answer to question 1 in the second part of this page!

Receive pension from Germany: Open bank account from abroad!?

17.1.2016

There are many people, who have worked for several years in Germany and built up pension rights. Now, in their fourth phase of life, this money is pending for monthly payments.

Often, the desire arises to open a bank account in Germany in order to receive the pension payments and eventually transfer the capital to the abroad … if you even need a bank account in Germany, we will clarify in the second part of the article!

This article was written especially for you!

Open bank account in Germany (being a senior citizen) ► Overview:

If you are still a German citizen and have a valid passport or ID-card, then your account opening is likely to be a piece of cake.

The Comdirect Bank and the Deutsche Kreditbank (DKB) are the best known banks in Germany, which open a checking account with Visa Card relatively easy for German expatriates.

Let’s continue

In the article „perfect account for Germans abroad“, both banks as well as their account openings have been presented in detail – therefore you find only the summary here:

Account is applied for online

The statutory identification (legitimating) can be performed via video chat with a webcam. You hold your identity document in front of the camera and a photo of your face will be taken.

This is very pleasant, fast and inexpensive, when you consider that the alternative would be a trip to Germany in order to personally open an account at a bank.

The Comdirect as well as the DKB perform a creditworthiness check based on your stated data and a query at the Schufa (credit investigation company).

Quite clear: Both banks offer a free checking account, which hopefully pays off for the bank through its use. That is why banks are seeking to open accounts for customers, who get along well with their finances.

All letters of the bank are sent free of charge to your abroad place of residence. The first letters contain the access data for online banking, PINs and of course the bank cards.

There are so many beautiful places on earth, where one can live for a while as a pensioner … This is Kapaa on Hawaii – and which place do you dream/think of?

Part 2: Your questions ► our answers

a) Do I have to open an account in Germany in order to receive the pension payments?

In most cases: No!

The German Pension Fund currently transfers the pension payments to about 150 countries.

As pension payment receivers, one only needs to specify the International Bank Account Number (IBAN) and the Bank Identifier Code (BIC or also called SWIFT code). In the case of the USA, these are Account Number and Routing Number.

Further question: Does it still make sense to set up a bank account for the pension payments in Germany?

In many cases: Yes!

Which cases these are, you can see here:

Abroad with other currency

If you live e.g. in Thailand or Canada. There is another currency and a Euro-account is not common.

The exchange rates fluctuate and at monthly payments, you always get the rate that applies at the bank abroad on the day of payment entry (the German Pension Fund transfers in Euros).

Abroad with high fees for incoming foreign transfers

A good example here is the USA, which charges up to USD 50 fees for incoming international bank transfers, depending on the bank.

Moreover, the pensioner living abroad must bear the bank charges. The German Pension Fund transfers via cost instruction “BEN”. That means that the receiving person bears the costs of the transfer. Often, there are additional costs for reference banks (i.e. intermediary banks for international transfers).

The transfer costs are simply deducted from the transferred amount. When receiving the money abroad, one receives less. Many pensioners do not even notice it, or accept it as a fee that one has to accept.

However, you do not need to accept it! The solution lies within in a bank account in Germany. As you read above, there are providers that offer you a free checking account being a German pensioner. Even the account opening is possible from abroad, thanks to modern technology.

Afterwards, the payment of the pension looks like this:

The pension fund transfers to your German checking account. Absolutely no fees will be deducted!

Now you decide what happens next! The following options are possible:

you can put money in a savings account in Germany in order to keep it safe in the old home country for later (e.g. DKB Visa Sparen).

you can transfer via TransferWise to your bank account abroad. This way you can save considerable fees compared to a bank-to-bank transfers, as some of our tests have shown (e.g. Polen or USA (both areGerman articles).

you wait a little with the transfer until the exchange rate is favorable.

Admitted: If you now live as a pensioner in Spain or Greece, you do not need a bank account in Germany for the pension payments due to the advantage of independent monetary management. After all, we live in the same Euro-area!

However, it could still be a good idea to maintain a bank account in Germany due to the tensions between the Euro-countries in terms of a common currency area. Or why do you think that many many thousands of Spaniards, Italians, Portuguese or Greeks have opened bank account in Germany in recent years?

b) Do I have to have the German citizenship to open an account in Germany?

No! But it is easier for the free direct banks to complete their standardized processes to make an account opening from abroad, if the identity document and the communication are in German language.

c) Do I have to pay taxes in Germany, if I have a bank account in Germany?

No! The solely fact that you have a bank account in Germany, does not justify a tax liability! You do not have to consign an annual income tax returns.

You can even get exempt from the automatic deduction of investment income (such as interest, of which people living in Germany have to pay a tax of more than 26 % (settlement tax + solidarity tax + church tax, if applicable).

You are welcome to ask further questions through the comments feature at the end of the article or participate in the answers.

Please remember that we are a special portal for smart banking in Germany and abroad and most often cannot respond to tax questions. If you are a tax expert yourself, then we would be grateful, if you could contact us regarding a cooperation.

Our core competence is the opening of bank accounts and their clever use.

… maybe the most important advice:

With the by us recommended free cards to the account in Germany (DKB Visa Card and Comdirect Visa Card), you can withdraw cash free of charge worldwide. This enables you to withdraw your pension in the abroad from your account, whenever you want to!

You might want to take a look at this page: https://www.deutscheskonto.org/en/comdirect-opening-current-account/ The Comdirect opens bank accounts in Germany for non-German citizens living abroad, if there is a special interest in an account in Germany. The account should actually be used, because the bank only earns money through its use. The account management and bank cards are free. The offer is only available in German language.

An alternative would be a paid current account at PayCenter https://www.deutscheskonto.org/en/account/online/ – there, the account opening is particularly simple, as no creditworthiness check is performed. The online banking in English language is expected to be available by the end of this year. The customer service is already working bilingual.

Currently, a legitimating through the German PostIdent-procedure is required. However, one is already working on a video solution. Although the account can be opened already today, but only deposits and no payments are possible until the legitimating is completed.

Good morning, I am a US citizen and I have just started to receive a small widow’s pension. Does this pension have to be deposited into a US bank? I do not understand about exchange rates, but I was under the assumption that if the Euro was stronger than the dollar, you should be getting more dollars when you exchange? I am somewhat mixed up with this. Would you please explain. Thank you.

In case you get your pension from “Deutsche Rentenversicherung”, please contact them regarding the disbursement and your bank regarding the exchange rate. As an external web portal we cannot answer these questions.

All we can write about publicly is how we would handle such a situation ourselves:
– Disbursement of the pension onto a German free-of-charge bank account (thus saving the fees for a foreign bank transfer)
– Transfer of the money via TransferWise to the USA (at a point in time when you find the exchange rates favorable, instead of the day when you receive the payment – also, the transfer with TransferWise is considerably less expensive, because the exchange rate (due to their system) is much better than with banks, and without the hard-to-calculate additional risk off correspondent banks – you also save the fees of an “international incoming wire”, because a TransferWise payment is booked via ACH.

We know, this sounds a bit complicated, which is why this specialty portal addresses smart banking customers that want to take charge of their financial life. Best of luck for you – regardless of which option you chose!